For
more information, contact
Kari Root or Eliza Brinkmeyer at 301-652-1558
or Jon Gardner at Health Affairs, 301-347-3930

SIGNIFICANT RISE IN NUMBER OF PEOPLE
TREATED
FOR MENTAL DISORDERS AND SELECTED CHRONIC ILLNESSES
DRIVING UP HEALTH SPENDING

Study Shows That Five Of
The Most Expensive Medical Conditions
Account For Nearly One-Third of Health Spending Growth Between 1987 and 2000

Bethesda, MD — Health
care spending rose nearly $200 billion between 1987 and 2000, thanks to a rise
in the number of individuals who were treated for a handful of chronic conditions
as well as an increase in the cost of treating patients with selected medical
conditions, says a new study
that appears today as a Web Exclusive in the journal Health Affairs.
The study, by Emory University economist Kenneth Thorpe and colleagues, shows
that five of the most costly medical conditions accounted for 31 percent of
the growth in health spending over that period. The U.S. health bill is growing
rapidly, in large part because more people are getting treated for mental disorders,
cerebrovascular disease, pulmonary disease, and diabetes, they say.

Using data from the 1987
National Medical Expenditure Survey and the 2000 Medical Expenditure Panel Survey,
the authors looked at health care spending by patients with the 15 most costly
medical conditions, examining how it was affected by changes in the number of
cases treated, population growth, and cost per case.

They found that substantial
increases in the number of people being treated accounted for

—59 percent of the
increased spending on mental disorders
—60 percent of the increased spending on cerebrovascular disease such
as stroke and cerebral ischemia
—42 percent of the increased spending on pulmonary disorders
—50 percent of the increased spending on diabetes

In 8 of the top 15 medical
conditions, the authors found that a rise in the cost per treated case —rather
than rising numbers of cases treated — accounted for most of the growth
in spending.
For example, there was very little change in the number of people treated for
heart disease between 1987 and 2000. However, the rise in the cost per treated
case, due chiefly to more expensive and effective drugs and technologies, is
what accounted for nearly 70 percent of the rise in medical spending over that
period. The rise in cost per treated case of hypertension also accounted for
60 percent of the overall growth in spending. Although the treated prevalence
of trauma declined between 1987 and 2002, the cost per treated trauma case rose
significantly over that period.

“If we really want
to get a handle on rising health care costs, we need to analyze what it is we’re
spending money on, instead of where we’re spending the money,” says
lead author Thorpe, the Robert W. Woodruff Professor and Chair, Department of
Health Policy and Management, Rollins School of Public Health at Emory University.
“By focusing on a disease-based analysis of spending, we can compare the
medical benefits we are purchasing,” he adds.

The authors note that for
some conditions, such as back problems and endocrine disorders, a rise in spending
can be attributed to an increase in both treated prevalence and cost per case.
In other cases, this rise in spending can be representative of either an increase
in the causes of disease, such as environmental factors, or increased access
to care.

Mental disorders are a case
in point. Although the prevalence of mental disorders stayed reasonably stable
between 1987 and 2000, the number of people treated for this condition nearly
doubled, from 4,373 to 8,575 cases per 100,000. This surge was due to both a
boost in the identification and diagnosis of these disorders, as well as the
increased availability and awareness of psychotropic medications.

The authors estimate that
population growth accounted for 19–35 percent of the increase in spending
across the 15 medical conditions, showing that demographic factors, in addition
to changes in medical technology, have an effect on spending changes over time.
An increase in prevalence of other diseases, such as diabetes and pulmonary
disease, may be attributable to environmental factors. The growth of diabetes
among the population is closely tracked with the rise of obesity. Death rates
and prevalence of asthma, the leading pulmonary disease, have risen since 1975.
This increase has been linked to environmental factors, including smoking, dust
mites, and poor air quality. These two conditions alone attributed to more than
12 percent of the growth in spending.

The authors warn that the
study is based on self-reported data, which may result in underreporting of
medical conditions and spending. The analysis includes only the noninstitutionalized
population. The authors did not take into account spending on medical conditions
that may have occurred in a nursing home.

They say that further research
is needed to determine whether this increase in spending is resulting in increased
medical benefits, or whether the same improvements in health care could be purchased
at a lower cost.

Health Affairs,
published by Project HOPE, is a bimonthly multidisciplinary journal devoted
to publishing the leading edge in health policy thought and research. Copies
of the 25 August 2004 Web Exclusive “What Medical Conditions Account for
the Rise in Health Care Spending,” can be obtained at www.healthaffairs.org.
Address inquiries to Jon Gardner, Health Affairs, at 301-347-3930,
or via e-mail, jgardner@projecthope.org.
Health Affairs Web Exclusives are supported in part by a grant from the
Commonwealth Fund.

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Health Affairs,
published by Project HOPE, is a bimonthly multidisciplinary journal devoted
to publishing the leading edge in health policy thought and research. Additional
peer-reviewed papers are published weekly online as Health Affairs
Web Exclusives at www.healthaffairs.org.
Health Affairs Web Exclusives are supported in part by a grant from
the Commonwealth Fund.